Will Cheap Gas Prices Hurt Tesla?

Tesla, lead by Elon Musk, was once the darling of Wall Street, especially having made a major splash with its all-electric vehicles. There’s no denying that Tesla is pushing the boundaries of the future of automobiles in general, let alone all-electric ones, but financial analysts are not too sure about its financial viability for the future.

As Tesla gets set to unveil its Model 3 this year, which is going to be its first mass market car due to its cheaper price tag of $35,000, there are a few concerning issues that might have a major impact on the company moving forward. The main issue is the cheap oil available in the global markets now, which has meant that gas prices have been and continue to remain quite low.

Why Low Gas Prices Matter.

One of the main focal points that Tesla hopes to use in promoting its upcoming Model 3 is that, besides having tremendous performance and being environmentally-friendly, it will save consumers a significant amount of money that they would otherwise spend on gas. Tesla has even expanded its Supercharger network of stations around the country to now number 609 Supercharger stations with a total of 3,574 Superchargers, which allows Tesla users to charge their vehicles for free.

But the average consumer who would be interested in a Tesla Model 3 might not feel that it’s necessary to switch over to an all-electric vehicle anymore because of how cheap gas currently is. Keep in mind that this hasn’t really been an issue for Tesla regarding its Model S or Model X vehicles, mainly because those who can afford either one of those, which are both priced much higher than the Model 3, aren’t too concerned about the cost of gas prices in general.

There Are Other Dangers Lurking As Well.

Besides the low cost of gas in the United States and in many parts of the world, with there being no sign that it’ll rise to any great degree in the future thanks to the flood of oil now available from Iran, Tesla has a few other things to be concerned about.

The first thing that it has to worry about is the increase in competition from other larger vehicle manufacturers in the all-electric car market. Starting at the end of this year, GM is releasing the Bolt, which is an all-electric vehicle starting at $30,000, even lower than the Model 3’s expected price tag.

Second, there’s now a rush to create a true mass market self-driving cars. Ford is apparently working in conjunction with Google on creating a viable self-driving vehicle, and GM is working with Lyft to do the same. Even Apple has been secretly working on their own self-driving car.

Tesla’s Model 3 may be a make or break moment for the company. If it’s successful, it will propel the company to new heights and legitimize it in the eyes of many, while if it’s a failure or only has middling success, the enthusiasm for Tesla’s future viability may become tempered. One thing that can’t be disputed, though, is Tesla’s dedication towards pushing the boundaries of what an all-electric vehicle can and should be.